An HMO is more difficult to value than other property, so needs a valuer who has specialist knowledge of HMOs.
Landlords looking for ways to increase their income will often consider houses of multiple occupation (HMO). Rents from several tenants will add up to more than that from a single household renting a house. HMOs are a specialist sector of the buy to let market. Many lenders offer commercial mortgages targeted at HMO purchases.
An HMO valuation is partly based on the achievable rental income. This will be affected by the location, including whether the property is near a transport hub, university or hospital.
HMOs are defined as property that is occupied by five or more people from two or more households. HMOs have to be licensed by the local authority. The valuer needs to check that the house conforms to the individual local authority licence conditions and may recommend that building work needs to be done to upgrade the house. This may have to be completed before mortgage funds are released, or shortly afterward.
There are also regulations about room sizes. If a room is too small it could be ineligible to be allowed as a bedroom. Lenders may have additional criteria for property which the valuer must be aware of.
HMOs have issues that landlords must also remain aware of. Commercial mortgages are available to purchase HMO houses, and bridging loans can be used for refurbishment work. Provided that the borrower has researched an HMO project thoroughly, good rental yields and capital growth can be achieved.